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Expat Investor : January February 2008
The buy-to-let market is now so inaccessible to the average investor that only the wealthy can afford to be become landlords, says a report from Royal Institution of Chartered Surveyors (RICS). Barriers to entering the buy-to-let market, driven by interest rates and levels of rental cover ratios for mortgages*; have made investment PROPERTY INVESTMENT expatinvestor.com 22 EXPAT INVESTOR January/February 2008 We make life simple for you. for a personal service for expat buy to let mortgages & offshore deposits www.irishpermanentintl.com +44(0)1624 641641 firstname.lastname@example.org Terms & conditions apply. Irish Permanent International is a registered business name of Irish Permanent (IOM) Limited which is licensed by the Isle of Man Financial Supervision Commission for Banking & Investment business. Fast Facts 22018 Lender Notes Barclays Bank Rate linked to Barclays Bank 3 month LIBOR rate applicable for a 90 day interest period. For house purchase Fast Facts 22500 only. On an interest only basis, max 65% LTV, advance £500k, term 5 to 20 yrs and fee 0.5%. Redemption charge applies. Barclays Euro Current Account required. Rates also available on same terms in dollars, Yen, Swiss Francs and Hong Kong dollars. HSBC International Rate is based on euro refinancing rate + 1.25%. Max 70% for house purchase and remor tgage if on repayment Fast Facts 22503 basis, or 65% for purchase and remtg on interest only basis. Max term -- 25 years on repayment basis or 15 years on interest only basis. Advance 100,000 -- 1m, fee 1,250. Income multiples 3.25 x 1st plus 1.25 x 2nd or 2.5 x joint. Applicant must have euro income. No redemption penalty payable. Investec Private Bank Rate is based on EURIBOR +1% to 1.75%. Max 70% LTV. Upfront fee of up to 1%. Fast Facts 22517 Min adv of £500k in euro equivalent. Also available on same basis in US$, Swiss Franc Japanese Yen, Australian $, Canadian $, Hong Kong $. Irish Permanent International Rate is based on EURIBOR + 1.24%. Max 75% purchase & remor tgage. No redemption fee payable. Fee 1% Fast Facts 22504 (min 1,500) Kaupthing Singer & Friedlander Rate is based on Euro LIBOR + 1.00% to 1.75% with option to set rate for 1, 3, 6 or 12 months. Fast Facts 22511 Max 70% for house purchase or remor tgages. Term 5 years interest only -- minimum advance £500k, fee varies. NatWest International Rate is based on 3 month LIBOR + margin. Max 60% purchase & remor tgage, on repayment or endowment Fast Facts 22507 basis, max term 30 years. Income multiples 3.75 x joint plus 1 x 2nd or 2.75 joint. Minimum advance £100k in euro equivalent. No redemption penalty payable. Fee -- refer. Mortgages for borrowers who are paid in euros to purchase or remortgage their main UK property Source: MoneyFacts Lender Location Currency Fast Facts Banco Halifax Hispania Spain Euro 22520 HSBC France, Spain, Malta Euro, Maltese lira or selected major currency 22503 Investec Private Bank France, Italy, Spain, Por tugal, Sterling, euro, US$, Swiss Franc, Japanese yen, 22517 Monaco & Guernsey Australian $, Canadian $, Hong Kong $ Leeds BS Gibraltar & Spain Sterling 22505 Lloyds TSB France, Spain, Por tugal, Australia, NZ, Canada, US, Dubai, Currency of choice 22506 Hong Kong, Singapore & UK Newcastle Building Society Gibraltar Sterling 22516 Norwich & Peterborough BS Gibraltar & Southern Spain Sterling 22509 Royal Bank of Scotland International Spain Euro or sterling 22510 Conti Financial Ser vices Can arrange finance in over 40 countries 22519 Source: MoneyFacts Lender Rate % Max. % Fee Notes Fast Facts Barclays Bank 7.64 95 Varies Fixed, tracker and SVR 22500 Derbyshire 7.75 90 Varies Fixed rates 22501 Halifax 6.69 75 £499 Fixed and tracker rates 22502 HSBC International 6.44 90 Varies Fixed, discounted and tracker rates 22503 Irish Permanent International 6.5 80 1 % (min £750) Tracker rates available 22504 Kaupthing Singer & Friedlander (IOM) 6.75 80 Varies Min £500k 22511 Leeds BS (Gibraltar) 7.5 95 Varies Fixed, tracker, discount and variable rates. 22505 Leeds BS (Spain) 7.5 70 Varies Fixed, tracker, and variable rates. 22505 NatWest International 7.69 85 0.5 Fixed and tracker rates. Min £50k 22507 NatWest Mtg Ser vice 7.69 90 0.5 All products available 22507 Norwich & P'boro 7.49 75 - Tracker rates 22509 Royal Bank of Scotland 7.69 85 0.5 Discount, fixed and flexible rates 22510 Royal Bank of Scotland Int 7.69 85 0.5 Fixed, tracker and flexible rates 22510 Scarborough Building Society 7.74 95 Varies All products available 22513 Woolwich 7.64 80 Varies All products available 22512 Figures compiled: 3/1/08. Source: MoneyFacts www.moneyfacts.co.uk Expatriate = UK residents working abroad shor t-term and buying a property in the UK. Lender may allow property to be let. EXPATRIATE MORTGAGES EURO MORTGAGES OVERSEAS PROPERTIES Buy to let now a rich man's game Lender Location Fast Facts Barclays Bank UK proper ty 22500 HSBC Bank International UK proper ty 22503 Investec Private Bank UK & international proper ty 22517 Irish Permanent International UK proper ty 22504 Kaupthing Singer & Friedlander UK proper ty 22511 NatWest International UK proper ty 22507 Royal Bank of Scotland International UK proper ty 22510 Currency switching allowed on all major currencies Source: MoneyFacts FOREIGN CURRENCY LOANS All the information on interest rates published in Expat Investor is checked regularly and to the best of our ability. However, rates do change on all accounts sometimes frequently and we advise readers to double check those interest rates which they find appealing before beginning any transactions with the deposit-takers concerned. MOVING RATES an unattractive proposition for vast swathes of the population. In the current climate, would-be-investors need to lay down a deposit of £65,600 (30% of a property's value) for the average UK house in order to get a foothold on the buy-to-let ladder. This compares dramatically with the £10,100 (only eight percent of a property's value) required in Q1 2002 - a deterioration of over 500% in five years. Looking ahead, with evidence that rents are rising strongly and house prices predicted to remain flat in 2008, the yields on residential property could increase slightly in coming quarters, says RICS. "With interest rates also likely to fall, the deposit required to meet the rental cover ratios could be reduced somewhat, making buy-to-let a more attractive proposition for many." Commenting, David Stubbs, RICS' senior economist says, "It takes more capital than ever to set up a buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined. However,existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely." *Rental cover ratios for mortgages - prospective landlords must prove that the rent on the property in question will exceed 125% of the payments on the mortgage for which he or she is applying. WHERE IN THE UK TO BUY-TO-LET Location Property Value £ Percentage change % London 366, 428 19.5 South East 190, 433 2.1 South West 189, 973 9.4 East Anglia 158, 727 18.3 West Midlands 141, 727 10.3 Wales 141, 644 2.6 East Midlands 135, 198 -0.6 Yo r kshire 134, 719 3.6 North West 129, 455 6.5 North 121, 764 14.3 Region Yield Percentage change % Income £ Percentage change % North 6.29 0.1 7, 582 14.4 North West 6.5 5.3 8, 417 10.3 West Midlands 6.5 5.3 9, 244 16.2 Wales 6.4 -0.1 9, 103 2.4 South West 6 -6.3 11, 328 2.6 Yo r kshire 6.3 3.9 8, 512 7.6 East Midlands 6.4 -0.6 8, 649 -1 East Anglia 5.8 -0.2 9, 263 11.5 Greater London 5.6 -0.2 20, 392 19.3 South East 5.7 -3.8 10, 900 -1.9 Source: Paragon